Macro Briefing: 7 February 2023

* Death toll rises above 5000 in Turkey-Syria earthquake
* US economy is key challenge for Biden in tonight’s State of Union address
* GOP House Speaker McCarthy calls on Biden to agree to spending cuts
* Chinese search engine giant Baidu’s shares surge after AI bot announcement
* Google set to launch Bard, an artificial intelligence bot to rival ChatGPT
* CVS set to acquire primary-care provider Oak Street Health for $10.5 billion
* Market breadth improves in this year’s stock market rally
* Policy-sensitive 2-year US Treasury yield rises to one-month high:

Does a strong seasonally adjusted US payrolls trend justify tighter Fed policy? “This January’s job loss was slightly less than January 2007 or January 2020 (if such pre‐​recession data provide any comfort), so it looks like a big gain in such relative terms,” writes Alan Reynolds, a senior fellow at the Cato Institute. “The fallacy that ’employers added a robust 517,000 jobs last month’ confounded a statistician’s seasonal adjustment with an actual increase in the number of people collecting paychecks. There were nearly 2.2 million fewer people on private payrolls in January than December, and that did not ‘boost their overall incomes.'” He concludes: “Unless Fed officials believe they must try to shove down the Bureau of Labor Statistics’ seasonal adjustments with higher interest rates, it would be even more foolish than usual for them to treat these preliminary estimates of ‘seasonally adjusted’ job gains as a fearsome omen that falling inflation is about to flare up again in a mysterious burst of spontaneous combustion.”